South Africa: National Budget 2009/2010 Budgeting during a global credit and economic crisis. Kevin Lings Economist 12 February 2009

Transcription

1 South Africa: National Budget 2009/2010 Budgeting during a global credit and economic crisis Kevin Lings Economist 12 February 2009

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3 US monthly payroll changes 000 s

4 US consumer credit $ billion, month-on-month

5 US households have lost $6.6 trillion in assets over the last year Property 28.8% Mutual funds 12.3% Listed shares 37.0% Pension funds 21.9%

6 UK consumer confidence Index year average

7 Euro-area retail sales %y/y, 3-month ave

8 Japan exports %y/y. Exports declined by 35.5%y/y in December

9 China exports % y/y, 3mnth ave Export

10 Euro-area, US, Japan and UK official interest rates % 6 UK Euroland US 1 Japan

11 US Federal Budget $bn, 12-month running total

12 Open Budget Index 2008 Index out of 100 UK South Africa France New Zealand US Norway Sweden Brazil South Korea Czech Republic Germany Botswana India Russia Kenya Argentina Mexico Ghana Zambia Turkey Thailand Malaysia Malawi Morocco Nigeria China Vietnam Angla Saudi Arabia

13 SA GDP growth (government estimate) %

14 Fixed Investment Growth (government estimate) %

15 Current account (government estimate) % of GDP

16 Inflation (CPIX/CPI) (government estimate) % CPI

17 SA government s budget 2009/2010 main indicators 2008/ /2010 % change R billion R billion Revenue % Expenditure % Budget deficit Deficit as % of GDP -1.0% -3.9%

18 11/12 10/11 09/10 08/09 07/08 06/07 05/06 04/05 03/04 02/03 01/02 00/01 99/00 98/99 97/98 96/97 95/96 94/95 SA budget deficit as % of GDP % Fiscal years

19 09/10 08/09 07/08 06/07 05/06 Government expenditure & revenue as % of GDP % Fiscal years 35 Huge increase in expenditure Expenditure as % of GDP Revenue as % of GDP 28

20 '2009/10 '2008/ / / / / / / / / / /99 Government running a primary deficit Rbn Fiscal years Primary deficit estimated at 1.6% of GDP

21 Breakdown of tax revenue (2009/10) Transfer Duty 0.8% SDL 1.2% Customs 3.7% Excise duties 3.6% Other 2.3% Individuals 31.2% STC 2.9% Fuel levy 4.5% VAT 25.4% Companies 24.1%

22 2008/ / / / / / / / / / /99 Government budget revenue overruns Rbn

23 Revenue: Initial budget vs actual (2008/2009) Tax revenue Budget Individuals Actual Companies Customs duties Excise duties 4 13 Fuel levy 3 10 VAT

24 Main tax proposals 2009/2010 Personal income tax Personal income tax adjustment Adjustment in monetary thresholds (savings, medical scheme contributions) Business tax Industrial policy Indirect taxes Increase in fuel levy Increase in excise duties Electricity levy Incandescent light bulb levy Air Passenger departure tax Plastic bag levy Diamond export levy LOSS ON TAX PROPOSALS Additions Rm Subtractions Rm

25 Personal tax relief in previous tax years Tax relief for individuals: 1998/1999 R4bn 1999/2000 R5bn 2000/2001 R10bn 2001/2002 R8bn 2002/2003 R15bn 2003/2004 R13bn 2004/2005 R4bn 2005/2006 R6.8bn 2006/2007 R13.5bn 2007/2008 R8.4bn 2008/2009 R7.2bn 2009/2010 R13.0bn

26 Tax reduction for individuals <65 Taxable income (rands). Tax relief of R13.6billion in 2009/

27 Budget revenue increases 2009/ STC -5.0 Companies -1.2 Customs duties Individuals TAX REVENUE Transfer duties Skills development levy VAT 9.0 Excise duties 12.7 Fuel levy 22.9 After tax proposals

28 Breakdown of expenditure (including interest) State debt cost 7.2% Other 7.1% Defense 4.4% Public Order and Safety 9.9% Economic Affairs 19.0% Education 18.3% Housing and community 7.7% Health 11.0% Social Protection 15.4%

29 2008/ / / / / / / / / / /99 Government budget non-interest expenditure overruns Rbn

30 Budget Expenditure increases in 2009/10 Total 13.8 Other -0.7 State Debt 1.8 Health 7.4 Housing 8.0 Education 10.1 Public Order & Safety 11.4 Social Welfare 12.0 Defence 14.9 Economic services 44.3 Consolidated national and provincial expenditure %

31 Key expenditure items % of total 1990/91 05/06 06/07 07/08 08/09 09/10 Defence Police, courts, prisons Education Health Social security Economic services Includes water schemes, transport, communication etc

32 2011/ / / / / / /06 Public sector infrastructural spending Rbn R787bn, or 9.7% of GDP % of GDP

33 Social grant beneficiary numbers Number of people obtaining a social grant April April April April April April April Social grants represent spending of R80.38bn which is 3.5% of GDP April in the form of child support There has been a 18.3% average annual growth in the number of people obtaining a social grant from 2003 to 2009

34 09/10 08/09 07/08 06/07 05/06 04/05 03/04 02/03 01/02 00/01 99/00 98/99 97/98 96/97 95/96 94/95 93/94 92/93 91/92 90/91 Customs union payments by SA govt Rbn

35 11/12 10/11 09/10 08/09 07/08 06/07 05/06 Public sector borrowing requirement Rbn Fiscal years Eskom: Gov to provide R60bn over 3 years Gov to underwrite R26bn of existing debt Gov to underwrite R150bn in new debt

36 11/12 10/11 09/10 08/09 07/08 06/07 05/06 04/05 03/04 02/03 01/02 00/01 99/00 98/99 97/98 96/97 95/96 94/95 93/94 92/93 91/92 90/91 89/90 Government net domestic long-term bonds issued Rbn Fiscal years

37 11/12 10/11 09/10 08/09 07/08 06/07 05/06 04/05 03/04 02/03 01/02 00/01 99/00 98/99 97/98 Government net foreign funding Rbn Fiscal years

38 Government debt as % of GDP % Domestic debt Foreign debt

39 Government debt (gross) as % of GDP (2008) % Japan Italy Germany France US Canada UK South Africa

40 09/10 08/09 07/08 06/07 05/06 04/05 03/04 02/03 01/02 00/01 99/00 98/99 97/98 96/97 95/96 94/95 93/94 92/93 91/92 90/91 89/90 Debt servicing as % of total spending % Fiscal years

41 Evaluate the budget Aims Budget should be guide to govt's intentions Budget deficit contained Spending - efficiency Revenue - no ad hoc measures - efficiency of collection Positive impact on the economy - Growth - Inflation - Rand Exchange control relaxation Encouraging private sector investment Unemployment and Job creation Law & Order, Crime and Violence Poverty relief Encourage savings Encourage small business Innovation Negative No No No No No No Positive Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

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